Chilean Homebuilder Paz Gains as Valuation Drops to 2008 Low

Paz Corp SA (PAZ), Chile’s second-largest publicly traded home builder by sales, posted a record two-day gain after its valuation dropped to the lowest in three years.

Paz surged 18 percent to 239.26 pesos at 4:21 p.m. Santiago time, bringing the two-day gain to 33 percent. Volume was more than five times the average of the last three months. Chile’s stock market was closed for a holiday on Oct. 10.

The stock began gaining after its price-to-earnings ratio fell to 7.8 on Oct. 7, the lowest since September 2008, according to data compiled by Bloomberg. It currently trades at 10.3 times trailing earnings. That compares to a ratio of 15.6 for the benchmark Ipsa index. Paz’s price-to-book ratio is 0.9.

Paz “has been overly punished, even more than other home builders and construction companies,” Hernan Campos, head of research at Santiago-based wealth management firm Wac Inversiones, said in a phone interview. “Investors simply see a bargain, even as growth estimates for the construction sector aren’t very good.”

Shares dropped 66 percent this year through last week, while the Ipsa stock index fell 21 percent.

Paz knows of no extraordinary event or news that may explain the variation in price over the past two days, the company said in a statement posted today on the website of the Santiago stock exchange.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.